VAT on deregistration

VAT on deregistration

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I have a client who bought out a TV rental business a year ago.  Their turnover sharply dropped when the advised clients about the change and consequently are now below the VAT threshhold.

My problem is the value of the assets on deregistration.

They originally valued Fixtures, goodwill, IP and TV sets and equipment at £20k and transferred the business under TOGC rules.

Now they want to deregister.

Whilst they accept that the VAT must be paid on the asset value on deregistration, they are now pointing out that 25% of the sets have been returned and need to be disposed of and that the true value of the equipment is negligable.

Does anyone have any idea of how to justify this to HMRC if queries as their guidance basically says market value or resonable cost of replacement if the MV cannot be ascertained.

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chips_at_mattersey
By Les Howard
18th Sep 2015 10:56

Deregistration

The value to be applied is the value at the time of deregistration, which will be different from the original price. (VAT Act 1994, Sch 6, para 6(2) is your reference.

So, where goods that have negligible value, you should provide some explanation as to why this is the case. Your method of depreciation, approved by your Accountant if possible, should be provided.

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